Toyota is counting on the new Corolla to help it boost earnings in the months ahead.
Toyota Motor Co.’s quarterly earnings soared by 70% despite slightly softer sales, reflecting the Japanese giant’s cost-cutting efforts as well as the impact of the weak yen.
Toyota increased its earnings forecast for the full fiscal year after posting a $438.4 billion yen, or $4.4 billion, profit for the July – September period, up from 257.9 billion yen a year ago. The world’s largest automaker now expects to generate a 1.67 trillion yen profit for the fiscal year that ends on March 31, 2014.
“In addition to the impact of the weaker yen, operating income increased due to our efforts with our suppliers and distributors for profit improvement through cost reduction and marketing activities, such as enhancement of the model mix.,” said Nobuyori Kodaira, Toyota’s executive vice president, in a statement.
But the weak yen was clearly a factor in a quarter that saw sales slip ever so slightly to 2.24 million vehicles from 2.25 million a year earlier. Hoping to stimulate the economy, the Japanese government has rapidly expanded its money supply, sending the yen plunging sharply and, in turn, boosting corporate earnings in many industries dependent upon exports. That helped Honda increase its latest quarterly earnings by 46%, while Mitsubishi Motor Corp.’s profit almost tripled. Nissan reported a 2% gain last week but would have been in the red without the impact of the yen.
(For the full story on Nissan, Click Here.)
For Toyota, the weak yen was worth a full 280 billion yen, or $2.8 billion, in net income for the second quarter of the Japanese fiscal year.
The slight dip in sales during the most recent period largely reflects challenges Toyota has faced in China, where Japanese makers still are suffering from the impact of an angry territorial debate between the two countries.
On the other hand, Toyota has continued gaining ground in the critical U.S. market, and hopes to do even better in the months to come thanks to the launch of several critical new products, including an all-new version of the compact Corolla line and a heavily updated Tundra pickup.
For the first nine months of the calendar year, Toyota has maintained its global sales lead over key rivals General Motors and Volkswagen with a total of 7.41 million vehicles.
(Toyota among many makers to introduce some wild, weird and wacky concepts at Tokyo Motor Show. Click Here for a closer look.)
But while the maker expects a big jump in earnings for the fiscal year, to the equivalent of $16.9 billion at current exchange rates, it did not increase its sales forecast from the previous 9.1 million. Any gains in North America, Europe and the home Japanese market are expected to be offset by problems in China and other parts of Asia.
In fact, GM and VW are counting on their leads in the booming Asian giant to help them topple Toyota from the global sales perch in the coming years.
Along with its focus on cost-cutting, Toyota officials have said in recent months that they are redoubling efforts to improve quality and deal with safety lapses that mean Toyota is running neck-and-neck with rival Honda in terms of the total number of vehicles recalled in the U.S. market so far this year. Toyota has led that list for four of the last five years.
The maker has generally maintained a strong position in terms of quality and reliability, however, though rival GM has been making headway in such widely followed studies as the Consumer Reports Automotive Reliability Survey. But while Toyota’s Lexus division led the latest CR study the influential magazine dropped its “Recommended” buy on the Toyota Camry due to the vehicle’s failure in a critical new crash test by the Insurance Institute for Highway Safety.
(For more on the latest Consumer Reports reliability survey, Click Here.)